Opportunities for government in the age of digital disruption

Ric Simes, Chris Richardson

Tax and Twitter might not sound as though they go together. But, along with YouTube films that explain tax deductions, the 140-character social-media phenomenon is just one of many ways the Taxation Office uses digital technology to improve service for Australians.

And yet, for every example of digital innovation in the public service, there is another anecdote of a risk-averse bureaucracy sticking with hard copies and facsimiles, and not allowing staff to connect their devices to networks.

The Taxation Office is a good example of a government agency using a range of helpful digital technologies. Photo: Michel OSullivan

Either way, doing more with less is becoming a familiar refrain for federal, state and local government agencies across the country. Budget deficits, revenue squeezes and efficiency dividends are the new reality, and a rising challenge for many.

Which is where digital comes in. One of the main drivers of significant change in the private and public sectors is the powerful and pervasive influence of digital disruption: the positive and negative effects on business and government of the digital revolution.

Digital is exploding the status quo, reducing barriers to entry in the business world, blurring category boundaries, and opening doors for a new generation of entrepreneurs and smart thinkers.

The digital age is confusing and confronting. And if they haven't already, what were reasonably defined boundaries for private and public sector organisations and industries will change.

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Against this backdrop, Deloitte released a new report recently, Digital disruption: Short fuse, big bang?, which charts the projected magnitude of disruption in various sectors with likely timelines, and offers practical advice to leaders on how to pull together the right strategic responses. Almost a third of the Australian economy is confronted by a ''short fuse, big bang'' scenario over the next three years. Government services, education, health, utilities and postal services also all appear on our digital disruption map - with a longer fuse (over three to five years) but an equally big bang.

With their commercial and competitive imperatives, the argument that businesses must grab digital challenges and opportunities by the horns to ensure a viable future is a relatively straightforward one.

But what about government? As the single biggest business in Australia (accounting for, across its various levels, about 30 per cent of the national economy), how can the public sector harness digital innovation given that it lacks the usual profit and performance indicators available to companies? How can governments change the way they raise revenue? Can they be more efficient and fair in new and innovative ways? Does the rise of new technologies mean government doesn't need to do things it has traditionally done? Or are there now new areas requiring government involvement? And how will the public sector's role in setting the rules for businesses and families need to change as the world changes around us?

Yet digital underperformance remains a risk in the public sector; an innately conservative sector that is tightly bound to the chariot wheels of election and business cycles, and hence is more worried than it should be about the risk of a ''bad story'' on the front pages.

While there have been some major strides - such as moving tax returns online and rolling out e-health and online education initiatives - ''doing nothing'' still remains a more viable option than it should. Attempts to harness the power and potential of new technologies are also too often affected by stop/go spending patterns and changes of funding fashions as governments change.

This is a real shame. At its simplest, ''government'' is nothing more than our national social contract: the way in which we, as Australians, agree to raise money from companies and people to help the young, the old, the sick and the poor, as well as to build roads and other infrastructure, and to protect the nation. That means digital underperformance hits hard, and often hits those whom society most wants to help.

For every example of digital innovation in the public service, there is another anecdote of a risk-averse bureaucracy sticking with hard copies and facsimiles.

Governments also possess reams of information, but even allowing for appropriate privacy concerns this national treasure is largely untapped when it could be used to provide platforms for wider innovation. As the Government 2.0 Taskforce noted in late 2009: ''Once public sector information is liberated as a key national asset, possibilities - foreseeable and otherwise - are unlocked through the invention, creativity and hard work of citizens, business and community organisations. Open public sector information is thus an invitation to the public to engage, innovate and create new public value.''

Similarly, digital means governments can now know a lot more about what their ''customers'' want. Yet because this is a relatively new phenomenon, many agencies are lost in ''business as usual'' mode, failing to recognise they can now tap into their customers' wants and needs in a manner never before possible, and then use that information to tailor their services in a better way and ever more cost-effectively.

So what should governments do? No one would suggest the answer is simple, particularly as the right role for government will itself change over time as technologies and society change. In practice, it's likely that digital developments will give governments better tools to use in fulfilling their roles, allowing them to take a lighter touch and become more responsive. In turn, governments may become more efficient and the rules they set for families and businesses less intrusive.

Broadband internet will be a big enabler of digital disruption. In turn, that means governments can make a difference for others via policy of some kind for high-speed broadband, as well as support for competition in telecommunications generally. Indeed, there are already many success stories evident where governments have supported digital innovation to great effect (such as the roll-out of fibre broadband in South Korea, the growth of high-speed data networks in Japan, and the spread of free Wi-Fi in American cities).

High-speed broadband, coupled with the adoption of cloud computing, represents an unprecedented platform for public sector productivity improvements. Importantly, however, those gains will only be realised if there is a commensurate increase in the innovative capacity and culture within government institutions.